January Employment Data

In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses employment data for January.

Broadly speaking, the improvement is good news, but the continuing high unemployment rate and a large number of people not in the labor force still imply a need for much faster gains.

The net payroll job additions of 157,000 in January bring the 12-month total to a cool 2 million. Essentially, this means 5 million net new jobs in the past 3 years. Still, we need to be cognizant of the 8 million net job losses during the Great Recession. Therefore, the recovery so far has been 70% of the prior job numbers peak.

The housing market recovery is playing a key role in job creation in the construction sector, which added 28,000 jobs in January and nearly 100,000 in the past four months. Jobs at furniture stores and at building/garden supply stores are also slowly coming around.

Even though the jobs are being added, the population growth and the constant increase in new college graduates have also increased. Furthermore, the number of non-working but not classified as unemployed has been rising as some took an early retirement package, went to graduate school, and most disturbingly a sudden sharp rise in the number of people receiving disability benefits.

For reasons above, the official unemployment rate has been falling from 10 percent to the current 8 percent. However, the employment rate (the number of people with jobs in relation to total adult population) has not improved at all after the deep plunge.

The average hourly earnings rose to $23.78, which is a gain of 2.1 percent from one year ago. The wage gain is roughly in line with consumer price inflation.

For real estate, what matters is the number of jobs and not the unemployment or the employment rate. The addition of 2 million jobs in the past year provides support for further rises in home sales and increased occupancy for commercial real estate.

Lawrence Yun is Chief Economist and Senior Vice President of Research at NAR. He directs research activity for the association and regularly provides commentary on real estate market trends for its 1 million REALTOR® members.